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1/A quick comment on Buffett and buybacks. The comment in today's letter, "Blindly buying an overpriced stock is value destructive," is not incorrect but it is incomplete
2/Here's the way to think about it 
3/The first point is that value is conserved. If a company is worth $100,000 and it pays out $20,000, the new value of the company is $80,000 and $20,000 is now out in the world
4/ the second point is that if the company buys back overvalued stock, the sellers gain (they realize a price in excess of intrinsic value) and ongoing holders lose (the intrinsic value per share of their holders goes down)
5/ the third point is that if the company buys back undervalued stock, the sellers lose (they realize a price below of intrinsic value) and ongoing holders win (the intrinsic value per share of their holders goes up)
6/ a dividend treats all shareholders the same, before any tax considerations
7/So Buffett's comment that buying overpriced stock price is value destructive is true from the point of view of the ongoing holders but not in the aggregate. That said, the goal of judicious capital allocation is to increase the long-term value per share for ongoing shareholders
